Motor
Vehicles Act, 1988 - Section 168 - Deduction can be ordered only where the
tortfeasor satisfies the court that the amount has accrued to the claimants
only on account of death of the deceased in a motor vehicle accident.
It is not disputed that the last drawn income of the
deceased including DA was Rs.58,565/. On this amount, the deceased would
definitely have been paying some income tax. Since exact calculations of the
same has not been given, we deduct about Rs.2,565/ per month for this purpose
and for purposes of calculation of loss of income, assess the income as
Rs.56,000/ per month. Out of this amount 1/3 is deducted i.e. Rs.18,667/, for
personal expenses leaving a balance of Rs. 37,333/ per month as loss of
dependency to the family, which works out to Rs.4,47,996/ per annum. Applying
a multiplier of 11, the compensation works out to Rs.49,27,956/. In addition
thereto, according to the judgment of this Court in Pranay Sethi case (supra),
the claimants are entitled to Rs.15,000/ for loss of estate, Rs.40,000/ loss
of consortium, Rs.15,000/ for funeral expenses i.e. a total amount of
Rs.49,97,956/ which is rounded off to Rs.50,00,000/. On this amount, the
claimants shall be entitled to interest @ of 9% per annum from the date of
filing of the petition till the payment of the amount. Obviously, the insurance
company shall be entitled to deduct/adjust the amounts already paid by it. The
appeals are allowed in the aforesaid terms.
Motor
Vehicles Act, 1988 - Section 168 - Whether Court should deduct the amount being
received by the family members under the EFB Scheme while calculating the loss
of income - Held, this amount cannot be
deducted - The payment of the amount under the EFB Scheme more than offsets the
loss of future prospects.
Under the EFB Scheme, the nominee or legal heir(s)
of the deceased employee have to deposit the entire amount of gratuity and all
other benefits payable to them on the death of the employee. In the present
case, it stands proved that the claimants have deposited a sum of
Rs.27,43,991/ received by them on the death of the deceased with the employer
and are now getting about Rs.50,082/ per month. This amount of Rs.50,082/ is
to be paid to the legal heirs under the EFB Scheme only till date of retirement
of the deceased. Even if an interest @ of 12% per annum is calculated on the
amount of Rs.27,43,991/, that would amount to Rs.3,30,000/ per year or
Rs.27,500/ per month. The appellantsclaimants are getting about Rs.50,000/
per month i.e. about Rs.22,500/ per month more, but this is only to be paid
for a period of about 7 years till 30.04.2021. This payment will cease
thereafter. However, since the claimants are getting quite an advantage, we
feel that the MACT was right in not taking into consideration the future
prospects in the peculiar facts and circumstances of the case. Therefore,
though we are not inclined to deduct the amount payable to the claimants, we
feel that in the peculiar facts and circumstances of the case, they are not
entitled to claim another amount @ of 15% by way of future prospects. The
payment of the amount under the EFB Scheme more than offsets the loss of future
prospects. This, in our opinion, would be ‘just’ compensation.
Motor
Vehicles Act, 1988 - Section 168 - “just compensation” should be paid to the
claimants.
Any method of calculation of compensation which does
not result in the award of ‘just compensation’ would not be in accordance with
the Act. The word “just” is of a very wide amplitude. The Courts must interpret
the word in a manner which meets the object of the Act, which is to give
adequate and just compensation to the dependents of the deceased. One must also
remember that compensation can be paid only once and not time and again. The
traditional view was that while assessing compensation, the Court should assess
the loss of income caused to the claimants by the death of the deceased and
balance it with the benefits which may have accrued on account of the death of
the deceased. However, even when this traditional view was being followed, it
was a well settled position of law that the tortfeasor cannot not take benefit
of the munificence or gratuity of others.
Motor
Vehicles Act, 1988 - Whether the amounts received by the deceased by way of
provident fund, pension, life insurance policies and similarly, in cash, bank
balance, shares, fixed deposits etc., are ‘pecuniary advantages’ received by
the heirs on account of death of the deceased and liable to be deducted from
the compensation. Held, these amounts have no corelation with the compensation
receivable by the dependents under the Motor Vehicle Act.
The law is well settled that deductions cannot be
allowed from the amount of compensation either on account of insurance, or on
account of pensionary benefits or gratuity or grant of employment to a kin of
the deceased. The main reason is that all these amounts are earned by the
deceased on account of contractual relations entered into by him with others.
It cannot be said that these amounts accrued to the dependents or the legal
heirs of the deceased on account of his death in a motor vehicle accident. The
claimants/dependents are entitled to ‘just compensation’ under the Motor
Vehicles Act as a result of the death of the deceased in a motor vehicle
accident. Therefore, the natural corollary is that the advantage which accrues
to the estate of the deceased or to his dependents as a result of some contract
or act which the deceased performed in his life time cannot be said to be the
outcome or result of the death of the deceased even though these amounts may go
into the hands of the dependents only after his death.
Motor
Accident Claims - Insurance Policy - The tortfeasor cannot take advantage of
the foresight and wise financial investments made by the deceased.
As far as any amount paid under any insurance policy
is concerned whatever is added to the estate of the deceased or his dependents
is not because of the death of the deceased but because of the contract entered
into between the deceased and the insurance company from where he took out the
policy. The deceased paid premium on such life insurance and this amount would
have accrued to the estate of the deceased either on maturity of the policy or
on his death, whatever be the manner of his death. These amounts are paid
because the deceased has wisely invested his savings. Similar would be the
position in case of other investments like bank deposits, share, debentures
etc.
Motor
Accident Claims - Service Benefits - Amounts of pension and gratuity cannot be
deducted.
As far as the amounts of pension and gratuity are
concerned, these are paid on account of the service rendered by the deceased to
his employer. It is now an established principle of service jurisprudence that
pension and gratuity are the property of the deceased. They are more in the
nature of deferred wages. The deceased employee works throughout his life
expecting that on his retirement he will get substantial amount as pension and
gratuity. These amounts are also payable on death, whatever be the cause of
death. Therefore, applying the same principles, the said amount cannot be
deducted.
IN
THE SUPREME COURT OF INDIA
CIVIL
APPELLATE JURISDICTION
(Madan
B. Lokur, J.) (S. Abdul Nazeer, J.) (Deepak Gupta, J.)
October
12, 2018
CIVIL
APPEAL NO(S). 1058889 OF 2018 (@ SLP (C) NO(S).1235912360 OF 2018)
SEBASTIANI
LAKRA & ORS. …. APPELLANT(S)
VERSUS
NATIONAL
INSURANCE COMPANY LTD. & ANR. … RESPONDENT(S)
J
U D G M E N T
Deepak
Gupta J.
Leave
granted.
2. These
appeals filed by the claimantsappellants are directed against the judgment
dated 21.12.2017 delivered by the High Court of Orissa at Cuttack whereby
compensation ofRs.40,90,000/awarded by the IInd Addl. District JudgecumVth Motor
Accidents Claim Tribunal, Rourkela (hereinafter referred to as ‘the MACT’) has
been reduced to Rs.36,00,000/.
3. The
MACT found that the revised basic pay of the deceased was Rs.51,328/and he was
entitled to DA of Rs.7,237/at the time of his death i.e. he was getting a total
salary of Rs.58,565/. However, the MACT, for the purposes of compensation,
assessed the monthly income of deceased at Rs.50,000/per month and deducted 1/3
for his personal expenses leaving a datum figure of Rs.33,333/per month. Since
the deceased was 52 years old, the MACT following the judgment of this Court in
Sarla Verma v. DTC, (2009)
6 SCC 121 applied a multiplier of
11 and assessed compensation at Rs.40,00,000/for loss of income, Rs.25,000/was added
for funeral expenses, Rs.5,000/for the loss of estate, Rs.50,000/towards loss
of consortium and Rs.10,000/for loss of affection i.e. total compensation of
Rs.40,90,000/was awarded to the claimants. The claimants and the insurance company
filed appeals challenging the quantum of compensation. The main ground raised
by the insurance company was that the claimants were being paid a sum of Rs.50,082/per
month under the Employees Family Benefit Scheme (for short ‘the EFB Scheme’).
The High Court, without giving any reasons, has reduced the compensation by almost
Rs.5,00,000/, to Rs.36,00,000/. Reasons are the heart and soul of any judicial
pronouncement. No judicial order is complete without reasons and it is expected
that every court which passes an order, should give reasons for the same.
4. We
have heard learned counsel for the parties and it is not disputed before us
that the last drawn income of the deceased including DA was Rs.58,565/per month.
According to the insurance company, since the claimants are getting a sum of
Rs.50,082/under the EFB Scheme, thisamount should be deducted in terms of the
judgment of this Court in Reliance General Insurance Co. Ltd. v. Shashi Sharma, (2016) 9 SCC 627. On the other hand, the
claimants/appellants submit that no deduction should be made in view of the judgments
rendered by this Court in the case of Helen C. Rebello v. Maharashtra SRTC, (1999) 1 SCC 90 and United India Insurance Co. Ltd.
v. Patricia Jean Mahajan, (2002) 6 SCC 281. The appellants further contend that,
in fact, as per the judgment rendered in National Insurance Co. Ltd. v. Pranay Sethi, (2017) 16 SCC 680 15% should be added towards future
prospects.
5. Section
168 of the Motor Vehicles Act, 1988 (for short ‘the Act’) mandates that “just
compensation” should be paid to the claimants. Any method of calculation of
compensation which does not result in the award of ‘just compensation’ would
not be in accordance with the Act. The word “just” is of a very wide amplitude.
The Courts must interpret the word in a manner which meets the object of the
Act, which is to give adequate and just compensation to the dependents of the deceased.
One must also remember that compensation can be paid only once and not time and
again.
6. The
traditional view was that while assessing compensation, the Court should assess
the loss of income caused to the claimants by the death of the deceased and balance
it with the benefits which may have accrued on account of the death of the
deceased. However, even when this traditional view was being followed, it was a
well settled position of law that the tortfeasor cannot not take benefit of the
munificence or gratuity of others.
7. In
Helen C. Rebello case (supra), the issue was whether the
amounts received by the deceased by way of provident fund, pension, life
insurance policies and similarly, in cash,bank balance, shares, fixed deposits
etc., are ‘pecuniary advantages’ received by the heirs on account of death of
the deceased and liable to be deducted from the compensation. This Court held
that these amounts have no corelation with the compensation receivable by the
dependents under the Motor Vehicle Act. The following observations were made by
the Court:
“35.
Broadly, we may examine the receipt of
the provident fund which is a deferred payment out of the contribution made by
an employee during the tenure of his service. Such employee or his heirs are
entitled to receive this amount irrespective of the accidental death. This
amount is secured, is certain to be received, while the amount under the Motor Vehicles
Act is uncertain and is receivable only on the happening of the event, viz.,
accident, which may not take place at all. Similarly, family pension is also
earned by an employee for the benefit of his family in the form of his contribution
in the service in terms of the service conditions receivable by the heirs after
his death. The heirs receive family pension even otherwise than the accidental
death. No corelation between the two. Similarly, life insurance policy is received
either by the insured or the heirs of the insured on account of the contract
with the insurer, for which the insured contributes in the form of premium. It
is receivable even by the insured if he lives till maturity after paying all the
premiums. In the case of death, the insurer indemnifies to pay the sum to the
heirs, again in terms of the contract for the premium paid. Again, this amount
is receivable by the claimant not on account of any accidental death but otherwise
on the insured’s death. Death is only a step or contingency in terms of the
contract, to receive the amount. Similarly any cash, bank balance, shares,
fixed deposits, etc. though are all a pecuniary advantage receivable by the
heirs on account of one’s death but all these have no corelationwith the amount
receivable under a statute occasioned only on account of accidental death. How
could such an amount come within the periphery of the Motor Vehicles Act to be termed
as “pecuniary advantage” liable for deduction. When we seek the principle of
loss and gain, it has to be on a similar and same plane having nexus, inter se,
between them and not to which there is no semblance of any corelation. The
insured (deceased) contributes his own money for which he receives the amount
which has no corelation to the compensation computed as against the tortfeasor
for his negligence on account of the accident. As aforesaid, the amount
receivable as compensation under the Act is on account of the injury or death
without making any contribution towards it, then how can the fruits of an amount
received through contributions of the insured be deducted out of the amount
receivable under the Motor Vehicles Act. The amount under this Act he receives
without any contribution. As we have said, the compensation payable under the
Motor Vehicles Act is statutory while the amount receivable under the life
insurance policy is contractual.”
8.
In Patricia
Jean Mahajan case
(supra), the deceased was a doctor practicing in the United States of America.
He died on a visit to India. His wife had received an amount of $ 2,50,000/on account
of life insurance policies of the deceased. She had also received unemployment
allowance for 8 or 9 months and it was urged that these amounts should be deducted
from the compensation assessed. After referring to the entire law on the
subject including the decision in Helen C. Rebello case (supra) this Court held as follows:
“36. We are in full agreement with the
observations made in the case of Helen
Rebello that principle of
balancing between losses and gains, by reason of death, to arrive at the amount
of compensation is a general rule, but what is more important is that such
receipts by the claimants must have some correlation with the accidental death
by reason of which alone the claimants have received the amounts. We do not
think it would be necessary for us to go into the question of distinction made
between the provisions of the Fatal Accidents Act and the Motor Vehicles Act.
According to the decisions referred to in the earlier part of this judgment, it
is clear that the amount on account of social security as may have been
received must have a nexus or relation with the accidental injury or death, so
far to be deductible from the amount of compensation. There must be some
correlation between the amount received and the accidental death or it may be
in the same sphere, absence (sic)
the amount received shall not be
deducted from the amount of compensation. Thus, the amount received on account
of insurance policy of the deceased cannot be deducted from the amount of
compensation though no doubt the receipt of the insurance amount is accelerated
due to premature death of the insured. So far as other items in respect of
which learned counsel for the Insurance Company has vehemently urged, for
example some allowance paid to the children, and Mrs Patricia Mahajan under the
social security system, no correlation of those receipts with the accidental
death has been shown much less established. Apart from the fact that contribution
comes from different sources for constituting the fund out of which payment on
account of social security system is made, one of the constituents of the fund
is tax which is deducted from income for the purpose. We feel that the High
Court has rightly disallowed any deduction on account of receipts under the
insurance policy and other receipts under the social security system which the
claimant would have also otherwise been entitled to receive irrespective of
accidental death of Dr Mahajan. If the proposition “receipts from whatever
source” is interpreted so widely that it may cover all the receipts, which may
come into the hands of the claimants, in view of the mere death of the victim,
it would only defeat the purpose of the Act providing for just compensation on
account of accidental death. Such gains, maybe on account of savings or otherinvestment
etc. made by the deceased, would not go to the benefit of the wrongdoer and the
claimant should not be left worse off, if he had never taken an insurance
policy or had not made investments for future returns.”
9.
Thereafter, similar matter came up for consideration in Vimal Kanwar v. Kishore Dan, (2013) 7 SCC 476. This Court, following Helen C. Rebello case (supra) held that the amounts
received by the heirs by way of provident fund, pension and insurance cannot be
termed as ‘pecuniary advantage’ liable for deduction. This Court also held that
the salary received on compassionate appointment cannot be deducted.
10. In
Shashi Sharma case (supra) this Court was dealing with
the payments made to the legal heirs of the deceased in terms of Rule 5 (1) of
the Haryana Compassionate Assistance to the Dependants of Deceased Government
Employees Rules, 2006 (for short ‘the said Rules’). Under Rule 5 of the said Rules
on the death of a Government employee, the family would continue to receive as
financial assistance a sum equal to the pay and other allowances that was last
drawn by the deceased employee for periods set out in the Rules and after the
said period the family was entitled to receive family pension. The family was
also entitled to retain the Government accommodation for a period of one year
in addition to payment of Rs.25,000/as ex gratia. In this case, the threeJudge Bench
adverted to the principles laid down in Helen C. Rebello case (supra), followed in Patricia Jean Mahajan case (supra), and came to the conclusion
that the decision in Vimal
Kanwar case
(supra) did not take a view contrary to Helen C. Rebello or Patricia Jean Mahajan case (supra). The following observations
are relevant:
“15.
The principle expounded in this decision
in Helen C. Rebello case that the application of general
principles under the common law to estimate damages cannot be invoked for computing
compensation under the Motor Vehicles Act. Further, the “pecuniary advantage”
from whatever source must correlate to the injury or death caused on account of
motor accident. The view so taken is the correct analysis and interpretation of
the relevant provisions of the Motor Vehicles Act of 1939, and must apply
proprio vigore to the corresponding provisions of the Motor Vehicles Act, 1988.
This principle has been restated in the subsequent decision of the twoJudge Bench
in Patricia Jean Mahajan case, to reject the argument of the
Insurance Company to deduct the amount receivable by the dependants of the
deceased by way of “social security compensation” and “life insurance policy.”
However,
while dealing with the scheme the Court held that applying a harmonious
approach and to determine a just compensation payable under the Motor Vehicles
Act it would be appropriate to exclude the amount received under the said Rules
under the Head of ‘Pay and Other Allowances’ last drawn by the employee. We may
note that on principle this Court has not disagreed with the proposition laid
down in Helen
C. Rebello or in Patricia Jean Mahajan case (supra), but while arriving at a
just compensation, it had ordered the deduction of the salary, received under
the statutory rules.
11. The
Indian courts have consistently followed the multiplier system while assessing
compensation and the judgment of this Court in Sarla Verma (supra) has been reiterated by a
Constitution Bench of this Court in Pranay Sethi (supra)
in so far as choice of multiplier is concerned.
12.
The law is well settled that deductions cannot be allowed from the amount of
compensation either on account of insurance, or on account of pensionary
benefits or gratuity or grant of employment to a kin of the deceased. The main reason
is that all these amounts are earned by the deceased on account of contractual
relations entered into by him with others. It cannot be said that these amounts
accrued to the dependents or the legal heirs of the deceased on account of his
death in a motor vehicle accident. The claimants/dependents are entitled to ‘just
compensation’ under the Motor Vehicles Act as a result of the death of the deceased
in a motor vehicle accident. Therefore, the natural corollary is that the
advantage which accrues to the estate of the deceased or to his dependents as a
result of some contract or act which the deceased performed in his life time cannot
be said to be the outcome or result of the death of the deceased even though
these amounts may go into the hands of the dependents only after his death.
13.
As far as any amount paid under any insurance policy is concerned whatever is
added to the estate of the deceased or his dependents is not because of the
death of the deceased but because of the contract entered into between the deceased
and the insurance company from where he took out the policy. The deceased paid
premium on such life insurance and this amount would have accrued to the estate
of the deceased either on maturity of the policy or on his death, whatever be
the manner of his death. These amounts are paid because the deceased has wisely
invested his savings. Similar would be the position in case of other investments
like bank deposits, share, debentures etc.. The tortfeasor cannot take
advantage of the foresight and wise financial investments made by the deceased.
14. As
far as the amounts of pension and gratuity are concerned, these are paid on
account of the service rendered by the deceased to his employer. It is now an
established principle of service jurisprudence that pension and gratuity are
the property of the deceased. They are more in the nature of deferred wages.
The deceased employee works throughout his life expecting that on his
retirement he will get substantial amount as pension and gratuity. These
amounts are also payable on death, whatever be the cause of death. Therefore, applying
the same principles, the said amount cannot be deducted.
15. As
held by the House of Lords in Perry v.
Cleaver, 1969
ACJ 363 the
insurance amount is the fruit of premium paid in the past, pension is the fruit
of services already rendered and the wrong doer should not be given benefit of
the same by deducting it from the damages assessed.
16. Deduction
can be ordered only where the tortfeasor satisfies the court that the amount
has accrued to the claimants only on account of death of the deceased in a
motor vehicle accident.
17. The
issue before us is whether we should deduct the amount being received by the
family members under the EFB Scheme while calculating the loss of income.
18. The
EFB Scheme is totally different from the rules which were under consideration
of this Court in Shashi
Sharma case
(supra). Under this Scheme, the nominee or legal heir(s) of the deceased
employee have to deposit the entire amount of gratuity and all other benefits
payable to them on the death of the employee.
19. In
the present case, it stands proved that the claimants have deposited a sum of
Rs.27,43,991/received by them on the death of the deceased with the employer
and are now getting about Rs.50,082/per month. This amount of Rs.50,082/is to be
paid to the legal heirs under the EFB Scheme only till date of retirement of
the deceased. Even if an interest @ of 12% per annum is calculated on the
amount of Rs.27,43,991/, that would amount to Rs.3,30,000/per year or
Rs.27,500/per month. The appellantsclaimants are getting about Rs.50,000/per month
i.e. about Rs.22,500/per month more, but this is only to be paid for a period
of about 7 years till 30.04.2021. This payment will cease thereafter.
20. The
aforesaid payment is totally different to the payment made by the employer in Shashi Sharma case (supra) which was statutory in
nature. Therefore, we hold that this amount cannot be deducted.
21. However,
since the claimants are getting quite an advantage, we feel that the MACT was
right in not taking into consideration the future prospects in the peculiar
facts andcircumstances of the case. Therefore, though we are not inclined to
deduct the amount payable to the claimants, we feel that in the peculiar facts
and circumstances of the case, they are not entitled to claim another amount @
of 15% by way of future prospects. The payment of the amount under the EFB
Scheme more than offsets the loss of future prospects. This, in our opinion,
would be ‘just’ compensation.
22. It
is not disputed that the last drawn income of the deceased including DA was
Rs.58,565/. On this amount, the deceased would definitely have been paying some
income tax. Since exact calculations of the same has not been given, we deduct
about Rs.2,565/per month for this purpose and for purposes of calculation of
loss of income, assess the income as Rs.56,000/per month. Out of this amount
1/3 is deducted i.e. Rs.18,667/, for personal expenses leaving a balance of Rs.
37,333/per month as loss of dependency to the family, which works out to
Rs.4,47,996/per annum. Applying a multiplier of 11, the compensation works out
to Rs.49,27,956/. In addition thereto, according to thejudgment of this Court
in Pranay
Sethi case (supra), the claimants
are entitled to Rs.15,000/for loss of estate, Rs.40,000/loss of consortium,
Rs.15,000/for funeral expenses i.e. a total amount of Rs.49,97,956/which is rounded
off to Rs.50,00,000/. On this amount, the claimants shall be entitled to
interest @ of 9% per annum from the date of filing of the petition till the
payment of the amount. Obviously, the insurance company shall be entitled to
deduct/adjust the amounts already paid by it.
23. The
appeals are allowed in the aforesaid terms. Pending application(s), if any,
stands disposed of.
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